The NRL has stripped Melbourne Storm of two premierships, as well as any competition points this season, in the toughest punishment for a salary cap breach in NRL history.
NRL chief David Gallop has just announced the extraordinary penalty, after it was uncovered that the club paid $A1.7 million ($NZ2.21m) to its players outside the cap in the past five years.
The Storm have been stripped of their premierships in 2007 and 2009, three minor premierships and their eight competition points this season. They will not be able to accrue any more points this season, have been fined $A500,000 ($NZ651,000) and must pay back $A1.1 million ($NZ1.45m) in prize money.
“The elaborate lengths that they went to to hide the payments was quite extraordinary,” Gallop said. “These payments have allowed them to recruit and retain some of the best players in the game. There’s no alternative for the NRL in terms of penalty.”
Gallop said that the club had run a long-term system of “two sets of books”.
“This morning the Storm representatives have come in and confessed to a well-organised system of paying players outside the cap. On what we know this amounted to $A1.7 million in the last five years, including approximately $A700,000 ($NZ912,000) in 2010.
“The breakthrough in the investigation was the discovery by the salary cap auditor [Ian Schubert] and his team of a file in a separate room at the Storm to the room that contained the file with the players’ contracts.”
In statement released by the NRL, it was revealed that “the Storm maintained a dual contract system and the club has today confirmed that side letters promising extra payments were stored in a secret file at the home of the Chief Executive. The accounts were structured in such a way that it would appear the commitments were not apparent to either the Melbourne Storm Board or its owners.”
News Ltd chairman John Hartigan said “at this early stage” the architect of the elaborate payment system was former chief executive Brian Waldron, now the boss of incoming Super 15 rugby union team Melbourne Rebels. The Storm are owned by News Ltd.
The Storm’s acting chief executive Matt Hansen has been stood down.
Hansen and chairman Rob Moodie left NRL headquarters this afternoon after a meeting to discuss the allegations.
Hansen and Moodie left without commenting to the waiting media and are believed to have departed in a News Ltd car.
The penalty far exceeds that imposed on Canterbury. In 2002, the Bulldogs were deducted 37 competition points and fined $A500,000 ($NZ651,000) after being found guilty of salary cap breaches totalling more than $1 million in two seasons.
It took the Bulldogs from the top of the table to eventual wooden spooners.
The New Zealand Warriors were docked four points in 2006 for less serious breaches, but the punishment ultimately cost them a finals berth.
NRL team the Melbourne Storm have been hit with the biggest penalties in Australian sporting history for breaching the salary cap rules.
– stripped of the 2007 and 2009 Premierships
– stripped of the Minor Premierships of 2006-8
– stripped of all competition points for the 2010 season
– fined $A500,000 ($NZ654,380)
– will be forced to return $A1.1 ($NZ1.44 million) in prizemoney (prizemoney to be distributed evenly among the other 15 clubs)
– Individual awards by players will continue to be recognised.
– Neither Manly (2007) nor Parramatta (2009) will assume the Premiership titles in their respective years
– Salary cap breaches amounted to at least $A1.7 million over five years.
– Salary cap breach around $A400,000 in 2009
– Salary cap breach projected to be $A700,000 in 2010
– NRL says the Storm maintained a dual contract system
Factbox on the New Zealand connection at the Melbourne Storm, the National Rugby League (NRL) club today sanctioned for long-term salary cap rort:
Stephen Kearney – assistant coach to Craig Bellamy
First grade squad members – Adam Blair, Hep Cahill, Matthew Duffie, William Isa, Jeff Lima, Sika Manu, Kevin Proctor, Chase Stanley.
Melbourne Storm’s NRL season results and honours since entering the competition in 1998.
1998 – Ladder position: 3rd
Finals: Semi-finalists
1999 – Ladder position: 3rd
Finals: Premiers
2000 – Ladder position: 6th
Finals: Quarter-finalists
2001 – Ladder position: 9th
Finals: Failed to qualify
2002 – Ladder position: 10th
Finals: Failed to qualify
2003 – Ladder position: 5th
Finals: Semi-finalists
2004 – Ladder position: 6th
Finals: Semi-finalists
2005 – Ladder position: 6th
Finals: Semi-finalists
2006 – Ladder position: 1st (Minor premiers)
Finals: Runners-up
2007 – Ladder position: 1st (Minor premiers)
Finals: Premiers
2008 – Ladder position: 1st (Minor premiers)
Finals: Runners-up
2009 – Ladder position: 4th
Finals: Premiers
* Club also won the World Club Challenge twice (2000, 2010) and finished as runners-up once (2008).
It leads me to a question… are there salary caps in force anywhere in Rugby Union?
Why have salary caps,to me its a step backwards,if the teams can afford it then why deny the players of making huge amounts of money?
2@ Winnie – There are reasons…. mostly in the vein of or with a similar approach as the Competitions Act in SA or the Anti-Monopolies Legislation in the States.
What it tries to achieve is that the fabulously wealthy Clubs do not totally buy players to the effect that the Less affluant Clubs are out of any possible chance, thus ensuring a more competative competition and to an extent a fair chance to all.
It has merits but also undermines the principle of free trade, which we associate with democracy and success in a Capitalist System.
Let me give you an example…… Should anything prevent or curb or punish the Bulls for running such a good Administration and structures and place them in the same position as a Lions Franchise who is not run on business principles.
There are fine lines here…..
I hear what you saying but these unions are registered businesses and are out there to make profits. Its a dog eat dog world. Do you think the biggest companies in the world have not needed to walk over other companies to get where they are. As far as I am concerned it should be free trade and the strongest survive,in your example if the Lions cant cut it and run there organisation like a home affairs institution then they must close down,get taken over or get new management and financial backing involved.
No matter what your view is on salary caps, personally, I too believe in the free market concept, the fact is this club’s administrators have committed fraud and misrepresentation. The cost for this folly will be extracted, eventually, by a criminal court.
The Melbourne Storm’s actions in breaching the salary cap do have an impact on Australian rugby insofar as several of their leading players could/would/should have been attracted to our game prior to accepting salary cap-breaching contracts. For example, one of Australia’s most talented athletes is a player named Greg Inglis; his natural talent on the field is extraordinary. He is a natural fit to rugby, but was convinced to stay at the Storm with extra $$$$, thereby contributing to the salary cap breach.
I have no sympathy for league, for the position they find themselves in was always going to occur, and indeed, may not stop at just this one club, it could be rife across the whole competition – time will tell.
League has, over many years, stripped Australian rugby of some of its real home-developed stars, by throwing cash at them, and who would blame the players for going for the $$$$$?? Think back to a few of our best: Ray Price, Wally Lewis, Ricky Stuart, Michael OÇonnor, etc. Australian rugby battles to develop players in one-on-one competition with league. It’s hard to feel any sympathy for league – they fall on their own sword and the long term effects of this current debacle are going to be telling!!!
5@ Oldie – Good, so in effect this might be good for rugby in Ozzie as well over the long run!
6 @ gbs – g’day oracle!
Indeed, the eventual outcome may favour the ARU rugby stocks in terms of player quality and experience. However, we have to ask ourselves: do we want those players in our ranks (were they complicit in this salary cap rort by accepting the payments made to them in CASH?), or do we concentrate on our at-hand development plans? We are successfully developing a whole new playing group at the moment and that’s happening organically, so I believe we should adhere to our current strategic plans.
Other rugby playing countries might only ponder just what Australia’s playing strength would be IF no rugby league existed whatsoever. I can check the crystal ball and suggest that a combination of the massive natural playing talent being (I believe) wasted in league plus our current rugby strength would make every other playing country envious. I can, however, soothe the concerns by suggesting you have nought to fear: IT AIN’T GOING TO HAPPEN!!!!
7 – Old Griquas, Hello mate how you doing? You watching any of the rugby at the moment? Looking forward to seeing the derby game against your Tahs and Walla’s Brumbies. Should be a good one.
Puma – g’day mate. Sitting by the screen waiting for kick off; then, tomorrow night the tahs – you little bewdy!!!!
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